DA Hike: Central Govt Employees, Pensioners to Get 46% Dearness Allowance from July; Cabinet Nod Received

In a major relief to over one crore central government employees and pensioners, the Union Cabinet has approved an increase in the dearness allowance (DA) and dearness relief (DR) by four percentage points to 46% from the existing 42%, effective from July 1, 2023. The decision was announced by Union Minister Anurag Thakur on October 18, 2023.

The hike in DA and DR is based on the recommendation of the 7th Pay Commission and the latest Consumer Price Index for Industrial Workers (CPI-IW), which showed a significant rise in inflation from January to June 2023. The DA and DR are periodic allowances given to central government employees and pensioners to mitigate the impact of inflation and rising prices of essential commodities.

The increase in DA and DR will benefit around 47.58 lakh central government employees and 69.76 lakh central government pensioners, including family pensioners. The revised DA and DR will be disbursed in September 2023, along with the arrears for July and August 2023.

The hike in DA and DR will result in a substantial increase in the monthly salary and pension of central government employees and pensioners. For example, a central government employee who gets a basic salary of Rs 39,900 per month will get an additional DA of Rs 1,596 per month, taking his total DA to Rs 18,354 per month. Similarly, a central government pensioner who gets a basic pension of Rs 40,100 per month will get an additional DR of Rs 1,604 per month, taking his total DR to Rs 18,446 per month.

The increase in DA and DR will also have an impact on other allowances such as house rent allowance (HRA), transport allowance (TA), children’s education allowance (CEA), etc., which are calculated as a percentage of the basic pay or pension. The hike in DA and DR will also enhance the gratuity, leave encashment, and other retirement benefits of central government employees and pensioners.

The decision to hike the DA and DR by 4% has been welcomed by various associations and unions of central government employees and pensioners, who have been demanding a timely revision of the allowances in view of the rising cost of living. The decision has also been appreciated by various experts and analysts, who have said that it will boost the morale and purchasing power of central government employees and pensioners, as well as stimulate the economy amid the COVID-19 pandemic.

The last time the DA and DR were revised was in January 2023, when they were increased from 38% to 42%, effective from January 1, 2023. The DA and DR are usually revised twice every year — in January and July — based on the CPI-IW data for the previous six months. However, due to the COVID-19 situation, the revision for July 2023 was delayed until October 2023.

The next revision of the DA and DR is expected to take place in January 2024, based on the CPI-IW data for July to December 2023. According to some media reports, the expected DA for January 2024 could be around 50%, which would be another major relief for central government employees and pensioners.

This post DA Hike: Central Govt Employees, Pensioners to Get 46% Dearness Allowance from July; Cabinet Nod Received was originally published at Finance Crave